Superior CX Has the Power to Overcome Life Insurance Price Sensitivity

In a market traditionally sensitive to price, results from a recent LIMRA study shared at the 2025 LIMRA Life Insurance & Annuity Conference has unveiled a surprising behavior: consumers are increasingly prioritizing a superior customer experience (CX) over cost. This revelation signals a paradigm shift for insurers seeking to capture and retain customers.

The study utilized a conjoint simulator to assess multi-attribute product preferences across five key product attributes: underwriting process, price, face amount, brand reputation (based on online star reviews), and personal recommendation source. Initial findings confirmed the expected, that price reigns supreme. However, a deeper dive into consumer trade-offs painted a more nuanced picture.

The Power of Positive Perception

While cost remained a critical factor, brand reputation emerged as a close second. Notably, consumers demonstrated a strong preference for companies with stellar online reviews, highlighting the significant influence of CX. The study found that consumers are 13 percentage points more likely to choose a product from a 5-star company than from a 4.5-star company. This underscores that even marginal improvements in CX can translate to substantial market share gains.

Good Reputation Can Superseed Price

To effectively assess the cross-section of price with the impact of brand reputation, an industry standard pricing table was applied. When reputational scores are equal, naturally price wins. However, as the reputational score differential increases, price sensitivity decreases. For example, a standard priced product from a 5-star carrier is preferred by 62% of respondents, when compared to a preferred priced product from a 3-star carrier. Even in scenarios comparing preferred vs. high priced products, eventually online reputation wins.

Ease of Application: A Premium Worth Paying

Pricing preferences were also assessed in relation to ease of applying. For example, participants were presented guaranteed acceptance products priced higher than fully underwritten offerings. Results revealed that consumers are seeking a balance between ease of process and price. Nearly two thirds of respondents selected products with simplified or simplified/accelerated underwriting. Higher priced guaranteed acceptance products were least preferred, while less than a quarter opted for lower priced, fully underwritten products. Overall, consumers are willing to pay slightly more for a faster, easier process.

LIMRA’s consumer decision-making study offers invaluable insights for insurers seeking to optimize their product offerings and enhance customer engagement. It emphasizes the growing importance of building a strong brand reputation through exceptional CX. Indicating that even small improvements in customer satisfaction can significantly impact market share. Similarly, streamlining the application and underwriting process is crucial. Offering simplified or accelerated options can reduce price sensitivity and attract customers willing to pay for convenience. Insurers who prioritize CX will be best positioned to build lasting relationships and thrive in an increasingly demanding market.

Source: Insights on the consumer decision making process for life insurance, LIMRA 2025